Stock Jobs Stock Trading Strategies 1 — Questions and Answers
Question 1: What is a 'buy and hold' investment strategy?
- Purchasing securities and holding them long-term regardless of market fluctuations (Correct answer)
- Buying stocks daily and selling at end of day
- Buying only during market downturns
- Holding cash and buying during crashes only
Correct answer: Purchasing securities and holding them long-term regardless of market fluctuations
Buy and hold is a passive strategy where investors purchase securities and hold them for years, ignoring short-term volatility.
Question 2: What does 'dollar-cost averaging' mean in stock investing?
- Investing only when stock prices are at their lowest
- Investing a fixed dollar amount at regular intervals regardless of price (Correct answer)
- Averaging the cost of multiple brokers' fees
- Buying stocks only in round-dollar increments
Correct answer: Investing a fixed dollar amount at regular intervals regardless of price
Dollar-cost averaging involves investing a fixed amount at regular intervals, which reduces the impact of volatility by buying more shares when prices are low.
Question 3: What is a 'contrarian' investment strategy?
- Following the majority of market trends
- Investing against prevailing market sentiment (Correct answer)
- Using only technical analysis
- Investing exclusively in foreign markets
Correct answer: Investing against prevailing market sentiment
Contrarian investors go against prevailing market sentiment, buying when others are selling and selling when others are buying.
Question 4: What is 'swing trading' in stock markets?
- Trading only on market open and close
- Holding positions for days to weeks to capture short-term price moves (Correct answer)
- Trading only dividend-paying stocks
- Rotating between sectors annually
Correct answer: Holding positions for days to weeks to capture short-term price moves
Swing trading involves holding positions for days to weeks to profit from expected price swings using technical and fundamental analysis.
Question 5: What is a 'momentum' trading strategy?
- Investing in stocks with declining prices expecting a reversal
- Buying securities that have shown upward price trends, expecting continuation (Correct answer)
- Trading only during earnings season
- Focusing on low-volume stocks
Correct answer: Buying securities that have shown upward price trends, expecting continuation
Momentum traders buy securities trending upward and sell those trending downward, betting trends will continue in the short term.
Question 6: What does 'scalping' refer to in stock trading?
- Profiting from large price moves over months
- Making many small trades throughout the day to capture tiny price differences (Correct answer)
- Buying undervalued stocks in bulk
- Trading only during pre-market hours
Correct answer: Making many small trades throughout the day to capture tiny price differences
Scalping is a high-frequency trading strategy where traders make dozens or hundreds of trades per day to profit from very small price movements.
Stock Jobs Stock Trading Strategies 1
What is a 'buy and hold' investment strategy?